Greece

Why Now Is the Time for Greek Debt Relief

The conventional wisdom is that Greek debt relief can’t happen before the German election. Angela Merkel wouldn’t want to risk the ire of her conservative voters.

But things could be more difficult after the election. There is a good chance Merkel’s Christian Democrats and the liberal Free Democrats will win enough seats to form a center-right government. The latter, while smaller, are more adamant in their views on the Greek debt crisis. They would find it hard to justify debt forgiveness to their voters.

That’s not the only reason why the time is right. Donald Trump and the rise of illiberal democracy around the world is another. Europe must circle the wagons to provide a counterweight to this dangerous development. Read more

Gas Exploration Opens New Doors in Nicosia

View from Nicosia of the Northern Cyprus flag painted on the southern slope of the Kyrenia Mountains, January 4 (Wikimedia Commons/Alexander Savin)

Located between Europe and the Middle East, Cyprus has historically been of strategic significance to powers on either side of the Mediterranean Sea. The discovery of natural gas off its shores has raised the island’s geopolitical profile — and might help it overcome communal tensions.

Cypriot waters are estimated to contain between 140 and 220 billion cubic meters of gas with an approximate value of €38 billion.

Exploration should spur economic growth and could make it easier for internationally-recognized Greek Cyprus and Turkey to hash out a compromise for the future of the island. Read more

Explaining the Latest Greek Drama

Time is — once again — running out for Greece. This time the sticking point is a €7 billion tranche from its bailout program. Greece needs the money by July, but European officials had hoped to reach an agreement with the International Monetary Fund about the payment early next week, lest Greece’s debt crisis become an issue in the Dutch and French elections.

The mood in Brussels isn’t hopeful, the Financial Timesreports. The expectation is that the creditors will miss their self-imposed deadline.

That would be especially unfortunate for the Dutch prime minister, Mark Rutte, who faces reelection in four weeks. He famously promised voters in 2012 that he would not support any more bailouts for Greece — but then he did. This is the worst possible time for him to be reminded of that broken promise.

There is no immediate risk of bankruptcy, let alone ejection from the eurozone, for Greece. But the closer we get to July, the more markets will worry and the more pressure will rise on lenders to hash out a compromise.

Greece Tries to Weasel Out of Spending Commitments Again

For the nth time, Greece is testing Europe’s patience by circumventing the spending commitments it made to qualify for financial support.

Surprised by a high budget surplus this year, the Greece prime minister, Alexis Tsipras, immediately vowed to use the money to fund free school meals for poor children, top up pensions for low-incomes retirees and freeze sales tax hikes on islands that are struggling to cope with refugees.

Tsipras, who leads the country’s far-left Syriza party, did not consult with his bailout monitors before making the spending pledges. Read more

Countries Most Critical of Russia Sanctions Least Affected

Prime Ministers David Cameron of the United Kingdom and Justin Trudeau of Canada listen to Italy’s Matteo Renzi at the G7 summit in Shima, Japan, May 26 (Palazzo Chigi)

The European countries that are among the most critical of the blog’s sanctions against Russia have been the least affected by the punitive measures, research shows.

A report from the Geneva-based Program for the Study of International Governance (PSIG) found that Italian exports, for example, suffered less than the European average from the sanctions, which restrict European companies from trading with Russian businesses and individuals who are linked to President Vladimir Putin’s regime.

Yet at a European Council summit on Friday, the Italian prime minister, Matteo Renzi, blocked a proposal from France, Germany and the United Kingdom to add penalties for Russia’s bombing of civilians in the Syrian city of Aleppo. Read more

Tusk Rebuffs Greek Attempt to Circumvent Lenders

European Council president Donald Tusk walks with Greek prime minister Alexis Tsipras to a photo shoot in Brussels, March 19, 2015 (European Council)

European Council president Donald Tusk has refused to call an emergency summit of government leaders to discuss Greece’s latest altercation with its creditors, maintaining that this must be resolved at the level of the finance ministers instead.

A day earlier, Jeroen Dijsselbloem, the Dutchman who chairs eurozone meetings, canceled just such a conference because he said there was no progress to discuss.

Greece has balked at implementing €3 billion in cuts to comply with the terms of its financial rescue package.

Alexis Tsipras, the Balkan nation’s far-left prime minister, sought to elevate discussion to the leadership level to circumvent Dijsselbloem as well as monitors from the International Monetary Fund who insist that Greece honor its agreements.

The IMF jointly administers Greece’s €86 billion bailout — its third since 2010 — with the European Union. Read more